Citing concerns that Minnesota businesses and their employees may have been affected by alleged “bid rigging,” Gov. Tim Pawlenty has asked Commerce Commissioner Glenn Wilson to review the relationship between brokers and insurance companies doing business in the state.
The Commerce Department has reportedly been closely monitoring recent activities in other states, including New York, where allegations have arisen that some commercial insurance brokers have accepted illegal payments from insurance companies.
“The insurance companies and brokers that are being investigated in other states also do business in Minnesota,” the Governor said. “While there have been no complaints about this activity, we need to take appropriate action to ensure that the marketplaces is not being manipulated through under-the-table deals.”
Allegations made in New York and other jurisdictions center around “contingent commissions” providing an incentive to purchase insurance for a business customer from the selected insurance company. In addition, other insurance companies allegedly submitted fake bids to make the process even more unfair for the commercial customer. Because the bidding process was not competitive, employees that purchased overage through a company provided benefits program may also have paid more than they should have.
Gov. Pawlenty is asking Commissioner Wilson to take appropriate action to determine what, if any, illegal activity has occurred in Minnesota or has affected businesses in the state. If violations of Minnesota law are discovered, insurance companies and agencies licensed to conduct business in the state could face sanctions, including civil and criminal penalties.
“Because insurance is regulated by each state, regulators from across the country are now working together to address these issues,” said Wilson. “Minnesota will be involved with any multi-state effort so we can leverage our resources and not duplicate the work of other jurisdictions.”
The Minnesota Department of Commerce regulates more than 20 industries including insurance, securities, real estate, and state-chartered banking.
Was this article valuable?
Here are more articles you may enjoy.
Biden Administration Raises FEMA Bar for Flood Resilience 
Damage From Hurricane Beryl May Cost Insurers $2.7B in US, $510M in Caribbean: KCC 
Deere Retreats From Diversity Measures After Online Attacks 
Beryl’s Remnants Spawned 4 Indiana Tornadoes, Including an EF-3: NWS 
